Building Loan Calculator

Author: Henrick Yau

- 13 October 2026

| |

Calculate your construction loan payments, interest during construction, and estimate the transition to a permanent mortgage. This calculator helps builders and homeowners understand the financing costs of new construction projects.

Project Details

Total Project Cost:

Include all construction costs, land, fees, etc.

Down Payment:

Typically 20-25% for construction loans

Land Value (if owned):

Enter 0 if land purchase is included in project cost

Construction Loan Term:

Typically 6-18 months

Loan Details

Construction Loan Interest Rate:

Draw Schedule:

Loan Fees & Points:

Origination fees, points, and other lender charges

Contingency Reserve:

Additional funds reserved for unexpected costs

Permanent Mortgage

Mortgage Interest Rate:

Mortgage Term:

Advanced Options

Include loan fees in construction loan

Include interest reserve in loan

Show permanent mortgage amortization

Show draw schedule details

Construction Loan Results

Total Construction Loan Amount

$320,000

Based on project cost and down payment

Construction Loan Balance Over Time

Construction Draw Schedule

Draw #	Month	Amount	Cumulative	Interest	Balance

Construction Phase Summary

Permanent Mortgage Details

Amortization Schedule (First 5 Years)

Year	Beginning Balance	Annual Principal	Annual Interest	Ending Balance

Understanding Construction Loans

Construction loans are short-term financing options designed specifically for building a new home or undertaking major renovations. They differ from traditional mortgages in several important ways.

Key Characteristics of Construction Loans

Draw Schedule: Funds are released in stages (draws) as construction progresses, rather than in a lump sum
Interest-Only Payments: During construction, you typically only pay interest on the amount drawn, not the full loan amount
Higher Interest Rates: Construction loans generally have higher rates than permanent mortgages due to increased risk
Shorter Terms: Usually 6-18 months, covering only the construction period
Inspection Requirements: Lenders typically require inspections before releasing additional funds

Construction-to-Permanent Loans

Many borrowers opt for construction-to-permanent loans (also called "one-time close" loans), which convert to a traditional mortgage once construction is complete. This option:

Reduces closing costs by combining two loans into one
Locks in your permanent mortgage rate before construction begins
Simplifies the transition from construction to permanent financing
Typically requires only one set of closing costs and fees

Cost Considerations

Contingency Reserve: Most lenders require a contingency reserve (typically 5-10% of project costs) to cover unexpected expenses
Interest Reserve: Some loans include an interest reserve to cover interest payments during construction
Down Payment: Construction loans often require larger down payments (20-25%) than traditional mortgages
Land Value: If you already own your land, its equity can often be used toward your down payment

Disclaimer: This calculator provides estimates based on the information you provide and standard financing assumptions. Actual loan terms, interest rates, fees, and draw schedules may vary based on lender policies, your credit profile, and specific project details. This tool is for informational purposes only and should not be considered as financial advice. Always consult with a qualified lender or financial advisor before making decisions about construction financing.

Monthly Mortgage Payment Formula:
$ P = L \times \frac{c(1 + c)^n}{(1 + c)^n - 1} $
Where:

P = Monthly payment
L = Loan amount
c = Monthly interest rate
n = Total number of monthly payments

What does the construction loan calculator do?

The Construction Loan Calculator is a handy tool for estimating the overall cost of constructing a new property or undertaking a significant home improvement. It assesses financing during the build phase and the shift to a long-term mortgage, giving users a clearer picture of monthly repayments, interest charges, and the funds required.

Serving as both a home financing planner and a mortgage cost planner, it simplifies the process of planning a property project from the initial stages through to completion.

Features: draw schedules, interest-only payments and mortgage conversion

Works out the construction loan amount based on project costs and deposit
Calculates monthly interest-only payments during the build period
Accommodates various draw schedules and customised draw arrangements
Includes loan fees, contingency funds, and optional interest reserves
Converts the construction loan into a permanent mortgage with amortisation details
Provides visual charts and detailed tables for straightforward analysis

Using the calculator: project cost, deposit, draw schedule and mortgage details

Follow these steps to obtain detailed construction loan and mortgage estimates:

Enter the total project cost, covering land, permits, and materials.
Specify your deposit and the value of any land you already own.
Choose a loan term (in months) and the construction interest rate.
Select a draw schedule that matches how you expect funds to be released.
Add any fees and contingency reserves if needed.
Provide the mortgage rate and term for the permanent financing stage.
Click "Calculate Construction Loan" to see your results.

How the tool maps your build-to-mortgage finances

This tool acts as a house financing guide and loan affordability guide, mapping out the financial journey from the first dig to a settled mortgage. It addresses questions such as:

What will my construction loan amount be?
How much will I pay in interest each month during the build?
What will my mortgage look like once the property is finished?

You’ll gain insights into your borrowing capacity, including a clear split of principal and interest, helping you make well-informed decisions. With straightforward amortisation tables and draw schedules, it also serves as a dependable loan amortisation and monthly mortgage planner.

Questions about construction loan estimates and mortgage conversion

What is a construction loan?

A construction loan is a short-term financing option that covers the costs of building a home. Funds are released in stages as the build progresses.

How are interest payments calculated?

Interest is typically charged only on the amount drawn down, not the full loan total. This calculator estimates those payments on a month-by-month basis.

What is a draw schedule?

A draw schedule sets out when loan funds are released during the construction process. Options include standard (5 draws), accelerated, delayed, or bespoke plans.

Can I include loan fees in the loan?

Yes. Using the advanced options, you can include loan fees and interest reserves as part of your total loan amount.

What happens after construction ends?

The construction loan usually converts into a permanent mortgage. The calculator shows your monthly mortgage payment and a 5-year amortisation schedule to assist with long-term planning.

Who benefits from a build-to-mortgage calculator?

Anyone planning to build a home or finance a substantial renovation will find this calculator useful, including:

First-time self-builders
Property investors
Developers
Homeowners planning a rebuild or major extension

It pairs well with other resources such as a mortgage payment tool, loan interest calculator, and home loan estimate tools to create a complete financial overview.

Bringing together construction loan and mortgage costs

Knowing your full financing needs from ground-breaking to final mortgage repayment is essential. This Construction Loan Calculator helps you plan with confidence—bringing together your loan payoff schedule, interest costs, and mortgage details in one place.

Whether you’re comparing finance options or checking what you can afford, it works as both a mortgage breakdown and a home financing guide, linking construction planning with long-term affordability.